KBR embraces ideas of investor it sued

KBR sued investor John Chevedden last year after he tried to submit a shareholder proposal for the company’s proxy. But apparently KBR likes Chevedden’s ideas, because it’s adopted them anyway.

In a filing with the Securities and Exchange Commission Monday, KBR said it will ask shareholders to approve changes to its bylaws that would require all directors to stand for election annually, instead of serving staggered, three-year terms. If approved, the changes will be complete when the last of the current terms expire in 2014. The company also is asking shareholders to approve electing directors by majority vote.

“It appears that they’re taking the steps to adopt to this,” Chevedden said of his proposal. “It’s a good step.”

These are basic corporate governance changes that many other companies have embraced, sometimes as a result of efforts by investors such as Chevedden. KBR, following in the footsteps of another Houston company, Apache, sued Chevedden on claims that he couldn’t adequately prove he was a shareholder. It’s a dubious claim, because, as I wrote earlier, companies such as KBR and Apache could make much the same claims against most individual shareholders thanks to the structure of electronic trading. Chevedden lost both cases, but neither ruling addressed the fundamental question of share ownership. Chevedden, who’s representing himself, is appealing the KBR case.

KBR hasn’t responded to my request for a comment.

It’s good to see KBR moving out of the stone age of corporate governance. The next step: acknowledging shareholders actually exist.